Statesboro Regional Library, Statesboro, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007

STATESBORO REGIONAL LIBRARY
STATESBORO, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

STATESBORO REGIONAL LIBRARY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUND

3

D

RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

4

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCE

GOVERNMENTAL FUND

5

F

RECONCILIATION OF THE GOVERNMENTAL FUND STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCE TO THE STATEMENT OF ACTIVITIES

6

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

7

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

8

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCE - BUDGET AND ACTUAL

GENERAL FUND

17

STATESBORO REGIONAL LIBRARY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

SCHEDULES OF REVENUE

2

STATE

18

3

FEDERAL

19

4

LOCAL

20

5 SCHEDULE OF SALARIES AND TRAVEL

21

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION III FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 3, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the Board of Regents of the University System of Georgia
and Director and Members of the Statesboro Regional Library Board
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities, the major fund and the aggregate remaining fund information (Exhibits A through H) of the Statesboro Regional Library as of and for the year ended June 30, 2007, which collectively comprise the Library's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Statesboro Regional Library's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe Library's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the major fund and the aggregate remaining fund information of the Statesboro Regional Library, as of June 30, 2007, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
2007ARL-41

Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 17 are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally ofinquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Statesboro Regional Library's basic financial statements. The accompanying supplementary information which consist ofSchedules 2 through 5, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,

RWH:gp 2007ARL-41

u).~
sell W. Hinton, CPA, CGFM State Auditor

STATESBORO REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2007
The discussion and analysis of the Library System's financial performance provides an overall review of the activities for the fiscal year ended June 30, 2007. The intent of this discussion and analysis is to look at the Library System's financial performance as a whole. A review of the basic financial statements and notes will also provide further understanding of the Library's financial performance.
OVERVIEW OF THE FINANCIAL STATEMENTS
Statesboro Regional Library System's statements are presented in three parts: District-wide financial statements, fund financial statements, and notes to the basic financial statements.
DISTRICT-WIDE FINANCIAL STATEMENTS
The District-wide Financial Statements are designed to provide a broad overview of the Library System's finances, in a manner similar to a private-sector business.
The Statement of Net Assets presents information on all of the Library's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Library System is improving or deteriorating.
The Statement of Activities presents information showing how the Library's net assets changed during the most recent fiscal year. The Statement of Activities presents governmental activity expenses in the following categories: Public Services (costs of providing library services including library materials), Technical Services (costs of selecting and preparing library materials for public use), Support Services (administrative costs of providing library services), Maintenance and Operations (costs incurred for the maintenance of grounds and facilities), and Information Technology (costs associated with providing access to electronic materials and services).
Program revenues include Charges for Services (fines and fees charged to library customers) and Operating Grants and Contributions (State of Georgia and Federal grants used for library operations). General Revenues include the contribution for library operations from the Bryan, Bulloch, Candler, Emanuel, and Evans Counties (local funds), Interest Revenue, and Miscellaneous Revenue from donations and other sources.
As is evident from the Statement of Activities (Exhibit "B"), the majority of Library System expenditures are paid out of revenue provided by area city, county, and/or boards of education ($1,118,370). Grants and Contributions not Restricted to Specific Programs, which consists of undesignated donations ($12,157), was broken out this year for the first time.

STATESBORO REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2007
FUND FINANCIAL STATEMENTS
A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The Statesboro Regional Library System like other State and local government entities uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
The Statesboro Regional Library System uses one governmental fund, the General Fund. This fund uses the modified accrual basis of accounting. Under this basis of accounting, revenue is posted when amounts are both measurable and available to fund current operations. Expenditures are posted when amounts will be disbursed in the near future (typically within sixty days).
Because the focus of the fund financial statements is narrower than that of the District-wide financial statements, it is useful to compare the information presented for the governmental fund (in the fund financial statements) with similar information presented for government activities (in the District-wide financial statements).
The fund balance of $869,678 reported on the Balance Sheet: Governmental Fund (Exhibit "C") is reconciled to the total net assets of $1,747,025 in the Statement of Net Assets (Exhibit "A"). The difference $877,347 in these is due to the following: (1) capital assets are not financial resources and are not reported in the funds and (2) fines and fees not collected within sixty days of fiscal year end are reflected as deferred revenue in the funds.
In addition, it can be noted that the "Net Change in Fund Balance" of $71,946 shown in the Statement ofRevenues, Expenditures and Changes in Fund Balance (Exhibit "E") is reconciled to the "Change in Net Assets" of $167,501 in the Statement of Activities (Exhibit "B"). The difference $95,555 is the change reported in the fund and the District-wide statements results from the following: ( 1) the fund financial statements report capital outlays as expenditures at the time of purchase, while the District-wide statement allocates the cost of capital assets over time through depreciation expense (See Note 4: Capital Assets) and (2) fines and fees revenues reported in the District-wide statement do not provide current financial resources and are not reported as revenues in the fund financial statements.
NOTES TO THE BASIC FINANCIAL STATEMENTS
The Notes to the Basic Financial Statements provide additional information that is essential to the full understanding of the data provided in the District-wide and fund financial statements.
FINANCIAL ANALYSIS-DISTRICT-WIDE
The Statesboro Regional Library System's overall financial position and operations at the District-wide level for the past two years is summarized in the following tables:
11

STATESBORO REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2007

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Net

Year 2007 Year 2006

Change

Assets Current Assets Capital Assets, Net

$ 935,394 830.628

$ 823,144 781,791

$ 112,250 48.837

Total Assets

$1,766,022 $1,604.935 $ 161,087

Liabilities Current Liabilities

$ 18.997 $ 25,412 $ -6,415

Net Assets Invested in Capital Assets Unrestricted

$ 830,628 916.397

$ 781,791 797,732

$ 48,837 118,665

Total Net Assets

$1,747.025 $1,579,523 $ 167.502

Total Liabilities and Net Assets

$1,766.022 $1,604.935 $ 161.087

l1l

STATESBORO REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2007

Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services Operating Grants and Contributions

Governmental Activities

Fiscal

Fiscal

Net

Year 2007

Year 2006

Change

$ 148,081 $ 85,609 $ 62,472

1,156,776

658,469

498,307

Total Program Revenues

$ 1,304,857 $ 744 078 $ 560,779

General Revenues: Participating Governments Unrestricted Grants and Contributions Investment Earnings Miscellaneous

$ 1,118,370 12,157 24,866 80 048

$ 1,104,428
9,448 133,283

$ 13,942 12,157 15,418 -53,235

Total General Revenues

$ 1,235,441 $ 1,247,159 $ -11,718

Total Revenues

$ 2,540,298 $ 1,991,237 $ 549,061

Program Expenses Public Services Technical Services Support Services Maintenance and Operations Information Technology

$ 1,091,410 114,121 471,185 622,276 73 805

$ 1,135,636 115,401 444,387 172,977 21 454

$ -44,226 -1,280 26,798
449,299 52,351

Total Expenses

$ 2,372,797 $ 1,889,855 $ 482,942

Change in Net Assets

$ 167,501 $ 101,382 $ 66,119

Beginning Net Assets

1,579,524

1,478,141

101,383

Ending Net Assets

$ 1,747,025 $ 1,579,523 $ 167,502

At June 30, 2007, the assets of Statesboro Regional Library System exceeded its liabilities by $1,747,025. The most significant portion of net assets is the Library System's investment in capital assets totaling $830,628. The Libraries use the assets (furniture, equipment, books, and collections) to provide services to library customers, so they are not available to fund current operations. Unrestricted net assets in the amount of $916,397 are available to fund future library operations.

Total current assets increased by $112,250 primarily due to an increase in cash.

The net balance of capital assets increased $48,837 due to the acquisition of additional assets. Future replacement of capital assets is considered in the preparation of all annual budgets and in long-term budget planning.

Current liabilities reflect the amount of outstanding items in accounts payable $18,997.

IV

STATESBORO REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2007

The increase in earnings on investments $15,418 is due to several generous undesignated contributions to Statesboro Regional Library that will soon be earmarked for capital improvement projects such as painting, recarpeting, and repair of the restroom facilities.

Total expenditures increased by $482,942 primarily due to increased salary and benefit expenses coupled with increases in the cost of maintenance and operations.

FINANCIAL ANALYSIS - FUND LEVEL

The Library's overall financial position and operations at the fund level for the past two years is summarized as follows:

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2007

Year 2006

Net Change

Total Assets Total Liabilities Total Fund Balance Total Revenues Total Expenditures

$ 935,394 65,716
$ 869,678
$ 2,493,580
$ 2142L634

$ 823,144 25,412
$ 797,732
$ 1,991,237
$ 1,8111126

$ 112,250 40,304
$ 71,946
$ 502,343
$ 544_438

Total revenues for 2007 increased $502,343, primarily as a result of increased income from local funding agencies, State funding, investment earnings from establishing 90-day reserve funds, and an increase in memorial gifts, particularly in Bulloch County. Total expenditures increased by $544,438.

BUDGETARY HIGHLIGHTS

The Business Services Department prepares funding requests for ten (10) local funding agencies on behalf of the six (6) affiliated libraries in Bryan, Bulloch, Candler, Emanuel, and Evans Counties. All funds are handled on an individual basis in each community. The Statesboro Regional Library System Library Boards approve annual budgets by June in preparation for the new fiscal year.

The operating budgets include proposed expenses and means of financing them. Individual library operating budgets are rarely revised during the year. The adopted fiscal year 2007 budgets were not amended during the year.

V

STATESBORO REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2007

Table 4 Budgetary Comparison Schedule
General Fund

Budgeted Amounts

Original

Final

Actual

Variance With Final
Budget

Fund Balance Beginning of Year

$ 791,733 $ 791,133 $ 797,733 $

Q

Revenues Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous

$1,170,555 1,157,964 30,088 38,350
87 897

$1,170,555 1,157,964 30,088 38,350
87 897

$1,118,370 $ 1,072,183 30,088 101,363 24,866 146,710

-52,185 -85,781
0 63,013 24,866 58,813

Total Revenues

$2,484,854 $2,484,854 $2,493,580 $ 8,726

Expenditures Current Public Services Technical Services Support Services Maintenance and Operations Information Technology Facilities Acquisition and Construction

$1,113,848 $ 1,113,848 $1,145,717 $ 31,869

121,579

121,579

114,121

-7,458

488,382

488,382

465,716

-22,666

193,469

193,469

177,666

-15,803

67,576

67,576

73,805

6,229

500,000

500,000

444,609

-55,391

Total Expenditures

$2,484,854 $2,484,854 $2,421,634 $ -63,220

Net Change in Fund Balance

$

0 $

0 $ 71 946 $ 71 946

Fund Balance - End of Year

$ 127,733 $ 797,133 $ 869,612 $ 11,946

Actual miscellaneous revenue $146,710 reflects gifts, memorials to the libraries, United Way funding for Literacy Services in Bulloch County, and Friends of the Library donations in the Bryan County, Statesboro, Metter, and Swainsboro facilities. Construction expenditures of $444,609 are for the major repairs needed for the Candler County Library after the substructure was declared unsafe and the library vacated. A modest local match from the City of Metter and Candler County Commissioners along with a Major Repair and Renovation Grant available through Georgia Public Library Services funded the repairs.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGET

The Library's financial position for the next year is projected to remain stable. State Grant funds are expected to increase due to State Legislative approvals for modest salaries increases. Local funding agencies are likely to slightly increase funding. There are no currently known facts, decisions or conditions that are expected to have a significant effect on Statesboro Regional Library System's financial position or its operations.

vi

STATESBORO REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2007 REQUESTS FOR INFORMATION This financial report is designed to provide the Statesboro Regional Library System's citizens, taxpayers, investors, and creditors with a general overview of the Library System's finances and to clearly illustrate the Library System's accountability for the money it receives. Questions concerning any of the information provided should be addressed to Ms. Lois M. Roberts, Director, Statesboro Regional Library System, 124 South Main Street, Statesboro, Georgia 30458.
Vll

STATESBORO REGIONAL LIBRARY

STATESBORO REGIONAL LIBRARY STATEMENT OF NET ASSETS
JUNE 30, 2007
ASSETS Cash and Cash Equivalents Investments Accounts Receivable
Federal Government Other
Less: Allowance for Doubtful Accounts Capital Assets
Capitalized Special Collections Equipment Library Collections Less: Accumulated Depreciation
Total Assets
LIABILITIES Accounts Payable
NET ASSETS Invested in Capital Assets, Net of Related Debt Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

434,123.00

444,972.39

2,400.00 203,058.53 -149,159.72

18,000.00 151,554.65 2,436,007.00 -1,774,933.48

$ ===1,=76=6=,0=2=2=.3=7

$ _ _ _-'--18'-'-,9"-'9_7_._6__2

$

830,628.17

916,396.58

$ ___1,._7,_47.....0_2_4_7._5

$ ===1='7=66=,0=2=2=.3=7

The notes to the basic financial statements are an integral part of this statement. -1-

STATESBORO REGIONAL LIBRARY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2007

EXHIBIT"B"

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

GOVERNMENTAL ACTIVITIES

Current Services Public Services Technical Services Support Services Maintenance and Operations Information Technology

$ 1,091,410.49 $ 114,121.11 471,185.05 622,275.55 73,805.27

148,081.19 $

619,454.06 $ 537,322.12

-323,875.24 -114, 121.11 -471, 185.05
-84,953.43 -73 805.27

Total Governmental Activities

$ 2,372,797.47 $

148,081.19 $

1 156 776.18 $ _ _ _-1..,_,0_6_7~,9_4_0._10_

General Revenues Allotments From Participating Governments Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Revenue

$

1, 118,370.29

12,156.64 24,866.22 80 048.01

Total General Revenues

Change in Net Assets

$

167,501.06

Net Assets - Beginning of Year

1,579,523.69

Net Assets - End of Year

$===1=7=4=7=0=2=4.=7=5

The notes to the basic financial statements are an integral part of this statement. -2-

STATESBORO REGIONAL LIBRARY BALANCE SHEET
GOVERNMENTAL FUND JUNE 30, 2007
ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Federal Government Other
Less: Allowance for Doubtful Accounts
Total Assets
LIABILITIES AND FUND BALANCE LIABILITIES
Accounts Payable Deposits and Deferred Revenue
Total Liabilities FUND BALANCE
Unreserved Undesignated Reported in: General Fund
Total Liabilities and Fund Balance

EXHIBIT"C"
GENERAL FUND
$ 434,123.00 444,972.39 2,400.00 203,058.53 -149,159.72
$ 935,394.20

$

18,997.62

46,718.15

$

65,715.77

869,678.43 $ 935,394.20

The notes to the basic financial statements are an integral part of this statement. -3-

STATESBORO REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT"D"

/
Total Fund Balance - Governmental Fund (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Capitalized Special Collections Equipment Library Collections Accumulated Depreciation
Total Capital Assets
Fines and Fees Revenues not collected within sixty days of fiscal year end are reflected as deferred revenue on the Governmental Funds Balance Sheet.

$ 869,678.43

$

18,000.00

151,554.65

2,436,007.00

-1,774,933.48

830,628.17 46,718.15

Net Assets of Governmental Activities (Exhibit "A")

$ 1,747,024.75

The notes to the basic financial statements are an integral part of this statement. -4-

STATESBORO REGIONAL LIBRARY

EXHIBIT "E"

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE

GOVERNMENTAL FUND

YEAR ENDED JUNE 30, 2007

REVENUES
Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Public Services Technical Services Support Services Maintenance and Operations Information Technology Facilities Acquisition and Construction
Total Expenditures
Net Change in Fund Balance
Fund Balance - Beginning
Fund Balance - Ending

GENERAL FUND
$ 1, 118,370.29 1,072,182.48 30,087.90 101,363.04 24,866.22 146 710.45
$ 2,493,580.38

$ 1,145,717.49 114,121.11 465,715.05 177,666.55 73,805.27 444,609.00

$ 2,421,634.47

$

71,945.91

797,732.52

$ ====8=629,=67=8=.4=3

The notes to the basic financial statements are an integral part of this statement. -5 -

STATESBORO REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUND STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES JUNE 30, 2007

EXHIBIT"F"

Total Net Change in Fund Balance - Governmental Fund (Exhibit "E")

$

Amounts reported for Governmental Activities in the Statement of Activities are different because:

Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:

Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense

$ 214,809.00 -165,972.00

Fines and Fees Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the Governmental Funds.

71,945.91
48,837.00 46718.15

Change in Net Assets of Governmental Activities (Exhibit "B")

$ 167,501.06

The notes to the basic financial statements are an integral part of this statement. -6-

STATESBORO REGIONAL LIBRARY STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2007
ASSETS Cash and Cash Equivalents
LIABILITIES Accounts Payable Funds Held for Others
Total Liabilities

EXHIBIT "G"

AGENCY FUNDS
$ ====1=,8=3=5.=91..,

$

65.64

1,770.27

$ ==1=,8=3=5...,.91=

The notes to the basic financial statements are an integral part of this statement. -7-

STATESBORO REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY
REPORTING ENTITY
The Statesboro Regional Library (Library) operates pursuant to Official Code ofGeorgia Annotated Sections 20-5-40 through 20-5-59 to provide public library services with costs shared by participating local governmental agencies and grants from the State of Georgia.
The Library Board is comprised often members which are also trustees ofthe member library which appointed them. The Library Board membership consists oftwo members appointed from the Bryan County Library Board, two members appointed from the Bulloch County Library Board, two members appointed from the Candler County Library Board, two members appointed from the Emanuel County Library Board, and two members appointed from the Evans County Library Board. The Library Board is without authority to determine the amount ofits funding, except by submission of budget requests to local governmental units from which the Library receives support and to the State of Georgia for State and Federal flow through funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Library Board has the power to designate management, the power to retain unreserved fund balances of local and other funds for continued operations and is the lowest level of oversight responsibility for the Library's operations. The Statesboro Regional Library is therefore determined to be a joint venture.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Library's basic financial statements are collectively comprised of the Library-wide financial statements, fund financial statements and notes to the basic financial statements of the Statesboro Regional Library.
Library-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities of the overall Library, except for fiduciary activities. Eliminations have been made to minimize the double counting ofinternal activities. Governmental activities generally are financed through intergovernmental revenues and other nonexchange transactions.
The Statement ofActivities presents a comparison between direct expenses and program revenues for each function of the Library's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the Library related to the administration and support of the Library's programs, such as office and maintenance personnel and accounting) are not allocated to programs.

-8-

STATESBORO REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the Library's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds.
The Library reports the following major governmental fund:
General Fund is the Library's primary operating fund. It accounts for all financial resources of the Library, except those resources required to be accounted for in another fund.
The Library reports the following fiduciary fund type:
Agency funds account for assets held by the Library as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The Library-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the Library gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The Library uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The Library considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Interest is considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds.
-9-

STATESBORO REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Library funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Library's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the Library to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the Library in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Library to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State ofGeorgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and

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STATESBORO REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(8) Obligations of other political subdivisions of the State of Georgia.

The Library does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES

Receivables consist of amounts due from grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed, fines and fees charged to patrons and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do include any amounts which would necessitate the need for an allowance for uncollectible receivables.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the Library-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the Library.

Capitalization thresholds and estimated useful lives of capital assets reported in the Library-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Equipment Library Collections Capitalized Special Collections

$ 5,000.00 5 to 10 years

$ 5,000.00

10 years

$ 5,000.00

NIA

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

NET ASSETS

The Library's net assets in the Library-wide Statements are classified as follows:

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STATESBORO REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Invested in capital assets, net of related debt - This represents the Library's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Unrestricted net assets - Unrestricted net assets represent resources derived from grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the general operations ofthe Library, and may be used at the discretion ofthe Library to meet current expenses for those purposes.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
( 1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

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STATESBORO REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 2007, the bank balances were $894,017.60. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the Library's name.

The Library's deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0.00

2

0.00

3

461,758.10

Total

$ 461,758.10

CATEGORIZATION OF INVESTMENTS Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event ofthe failure ofthe counterparty to a transaction, the Library will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The Library does not have a formal policy for managing custodial credit risk.

At June 30, 2007, the fair value ofthe Library's total investments was $49.70 and this entire amount consisted of common stock which was registered and held in the Library's name.

Note 4: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

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STATESBORO REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 4: CAPITAL ASSETS

Balances
July 1. 2006

Increases

Balances Decreases June 30, 2007

Governmental Activities Capital Assets, Not Being Depreciated:
Capitalized Special Collections

$ 18,000.00 $

0.00 $

0.00 $ 18,000.00

Capital Assets Being Depreciated Equipment Library Collections

$ 152,237.65 $ 9,117.00 $ 9,800.00 $ 151,554.65

2,319,687.00 205,692.00

89,372.00 2,436,007.00

Less Accumulated Depreciation for: Equipment Library Collections

112,762.48 1,595,371.00

9,185.00 156,787.00

9,800.00 112,147.48 89,372.00 1,662,786.00

Total Capital Assets, Being Depreciated, Net $ 763,791.17 $ 48,837.00 $

0.00 $ 812,628.17

Governmental Activity Capital Assets - Net $ 781,791.17 $ 48,837.00 $

0.00 $ 830,628.11

Current year depreciation expense by function is as follows:

Public Services Support Services

$ 160,502.00 5,470.00

$ 165,972.00

Note 5: RISK MANAGEMENT

The Library is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees and acts of God.

The Library has obtained commercial insurance for risk of loss associated with torts, assets, job related illness or injuries to employees and flood, mudslide, and mudflow. The Library has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Library's insurance coverage in any of the past three years.

The Library has elected to self-insure for all losses related to acts ofGod, except for flood, mudslide, and mudflow. In addition, the Library has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. The Library has not experienced any losses related to these risks in the past three years.

The Library has purchased surety bonds to provide additional insurance coverage as follows:

Position Covered
All Employees All Board Treasurers

Amount
$ 15,000.00 $ 15,000.00

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STATESBORO REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 6: SIGNIFICANT CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The Library believes that such disallowances, if any, will be immaterial to its overall financial position.

Note 7: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all librarians and clerical personnel employed by regional and county libraries are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Library who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The Library makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2007 2006 2005

100% 100% 100%

$ 87,369.00 $ 88,296.00 $ 86,014.00

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STATESBORO REGIONAL LIBRARY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2007

SCHEDULE "1"

REVENUES
Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Public Services Technical Services Support Services Maintenance and Operations Information Technology Facilities Acquisition and Construction
Total Expenditures
Net Change in Fund Balance
Fund Balance - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$

1,170,555.17 $

1,170,555.17 $

1, 118,370.29

1,157,963.75

1,157,963.75

1,072, 182.48

30,087.90

30,087.90

30,087.90

38,350.00

38,350.00

101,363.04

24,866.22

87,897.00

87,897.00

146,710.45

$

2,484,853.82 $

2,484,853.82 $

2,493,580.38

$

1,113,847.61 $

1,113,847.61 $

1,145,717.49

121,578.97

121,578.97

114,121.11

488,381.85

488,381.85

465,715.05

193,469.39

193,469.39

177,666.55

67,576.00

67,576.00

73,805.27

500,000.00

500,000.00

444,609.00

$

2,484,853.82 $

2,484,853.82 $

2,421,634.47

$

0.00 $

0.00 $

71,945.91

797,732.52

797,732.52

797,732.52

Fund Balance - Ending

$

797,732.52 $

797,732.52 $ ===8=69=,6=7=8=.4==3

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
The accompanying schedule of revenues, expenditures and changes in fund balance budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 17 -

STATESBORO REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007
AGENCY/FUNDING
GRANTS Board of Regents of the University System of Georgia Office of Public Library Services Salaries Library Materials Maintenance and Operations Repairs and Maintenance

SCHEDULE "2"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

444,781.11

90,079.25

137,174.02

400,148.10

$ ==1=1=,0=:7=!2'=18=2=.4=8

See notes to the basic financial statements.

- 18 -

STATESBORO REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE
YEAR ENDED JUNE 30, 2007
AGENCY/FUNDING GRANTS Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act State Library Program

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND
$ ==~3;,,;;,0i:;.,0,;;,;87~.9=0

See notes to the basic financial statements.

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STATESBORO REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2007
LOCAL SOURCES Boards of Education Bryan County Bulloch County Candler County City Governments Claxton Metter Swainsboro County Governments Boards of Commissioners Bryan Bulloch Candler Emanuel Evans

SCHEDULE "4"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

5,000.00

12,500.00

24,050.04

807.60 31,851.60 112,554.00

222,775.02 474,999.96
32,310.54 114,198.00
87,323.53

$ ===1,=1=18=,3=7=0=.2=9

See notes to the basic financial statements.

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STATESBORO REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

NAME
Anderson, Nancy K. Asbell, Cameron M. Atkinson, Jack Bacon, Barbara K. Bailey, Tyler F. Barker, Kathryn T. Beavers, Tawana J. Bolton, Virginia F. Bragg, Alicia Kim Buxton, Ann C. Capron, Loretta A. Collins, Gladys Commodore, Xandria L. Davis, Charles 0. DeFoe, Adrienne L. Deloach, Charlotte B. DeZouche, Elizabeth A. Downs, Shellie L. Drake, Tara Anne Durham, Jennifer M. Fay, Cora E. Garner, Jessica C. Glisson, Judy C. Griffin, Maxine Rose Gross, Irene Marie Guinn, Brent A. Hall, Kimberly B. Hein, Rebekah Joy Herrington, David E. Hildebaugh, Karen A. Hodges, Melinda A. Howard, Anglenette R. Hugensmith, Carolyn G. Humphries-Shatteen, Linder A. James, Christine Louise Johnson, LaTasha R. Kinnion, Judith E. Lee, Sue F. McCarthy, Evelyn C. McDuffie, Elaine H. Meadows, Leah M. Moore, Barbara L. Morris, Tia Nicole Mosley, Angela J. Nettis. Kathleen J. Nubern, Nancy D. Odom, Nancy B. Palmer, Judy D. Rickerson, Robert J. Roberts, Lois M. Royal, Sandra G. Samer, Linda H. Scott, Patti C. Stephens, Cynthia C. Strickland, Janice W. Sullivan, Karen A. Watkins, Betty 0. Weinberger, Paul Williams, Minnie K. Williford, Lora C. Varley, Carol Anne

TITLE CATEGORY
Circulation Manager Library Assistant Library Manager Library Assistant Library Assistant Library Manager Library Assistant Library Assistant Library Assistant Assistant Library Manager Library Assistant Library Assistant Library Assistant Librarian Library Assistant Assistant Library Manager Library Assistant Library Assistant Library Assistant Assistant Director Assistant Director Library Assistant Librarian Assistant Library Manager Library Assistant Library Assistant Library Assistant Student Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Student Assistant Bookkeeping Assistant Bookkeeping Assistant Library Manager Youth and Family Services Coordinator Student Assistant Library Assistant Student Assistant Library Assistant Library Assistant Assistant Library Manager Library Manager Library Assistant Librarian Library Director Bookkeeper Assistant Library Manager Library Assistant Library Assistant Librarian Library Assistant Library Assistant Library Manager Administrative Assistant Library Assistant Student Assistant

Totals per Report See notes to the basic financial statements.

- 21 -

SALARIES

TRAVEL

$

27,227.16 $

92.81

22,498.68

89.89

28,963.98

105.02

4,238.33

2,216.20

26,010.36

675.33

18,489.13

160.18

4,504.20

35.16

4,981.24

68.75

24,148.80

450.25

2,016.00

17,584.01

51.31

4,395.17

18,348.08

108.15

3,978.90

213.60

16,834.82

148.33

2,388.40

621.94

22,120.68

61,073.42

2,325.17

65,062.32

916.70

20,909.37

10.00

18,008.37

10,787.85

35.60

2,614.88

1,082.04

1,129.50

2,916.77

22,956.48

1,396.94

10,443.34

230.86

22,852.48

25,635.84

24,368.93

288.40

377.24

24,495.37

60.07

29,668.22

171.61

22,486.92

205.96

35,799.30

1,022.62

1,941.55

4,078.41

104.13

3,315.39

3,271.88

4,965.00

92.20

10,808.12

44.50

8,241.35

65.85

20,193.18

33.82

60,473.42

818.80

73,762.32

1,459.69

54,225.60

499.44

10,671.14

4,438.73

750.00

42.75

60,762.66

157.94

5,970.67

99.68

4,744.36

92.56

18,924.84

204.25

9,105.53

747.98

4 269.24

$

1 021 581.43 $

10 892.98

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

STATESBORO REGIONAL LIBRARY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6162-06-01 FS-6162-06-02

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented

SECTION III FINDINGS AND QUESTIONED COSTS

STATESBORO REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported.